AFC Energy (AIM: AFC), the industrial fuel cell power company, is pleased to confirm receipt of its first commercial order in Australia for its proprietary hydrogen power generation unit from refiner, Southern Oil Refining Pty Ltd ("Southern Oil").
- Southern Oil, through its wholly owned subsidiary Northern Oil Pty Ltd ("Northern Oil"), has placed an order for the first AFC Energy hydrogen power generation unit in Australia;
- The hydrogen power generation unit, expected to be sized between 200kW and 400kW, subject to engineering, will be located at Northern Oil's world leading Advanced Biofuels Refinery near Gladstone, Australia
- Non-refundable deposit to be paid to AFC Energy within five business days of the offer;
- Brief period of engineering now commencing to finalise final project sizing, scope and commensurate contract terms;
- AFC Energy plans to sell the balance of plant for its hydrogen generation unit to Southern Oil and lease the system's stack and electrodes for an undisclosed sum reflective of the project's capital cost (incl. fuel cells);
- Northern Oil to utilise surplus hydrogen from its Gladstone refinery in the process and consume all power produced within its facilities at a cost better than its existing grid power tariff;
- Project to be delivered in the first half of 2019.
Northern Oil's Advanced Biofuel Refinery near Gladstone, is currently operating to convert several waste streams into renewable crude, before refining it into 100% certified renewable fuel. The Advanced Biofuels Refinery, supported by the Australian Government, Queensland Government and ARENA (Australian Renewable Energy Agency), is a world first and within its operation, will require large volumes of industrially stable, renewable biohydrogen to support the refining process.
Northern Oil, is developing a new hydrogen generation technology to complement its refining process. The technology utilises Steam Over Iron Reduction and Chemical Looping processes to deliver cheaper and more efficient hydrogen than conventional Steam Methane Reformation ("SMR"). Northern Oil is building a large industrial scale pilot plant where surplus hydrogen generated from the system is to be made available for consumption within a fuel cell.
In October 2017, Southern Oil and AFC Energy entered into a non-binding Memorandum of Understanding outlining the intention to collaborate in the assessment of opportunities for the integration of an AFC Energy fuel cell system into Southern Oil's refining process.
Through this collaboration, Southern Oil has today placed an order with AFC Energy for a hydrogen power generation unit utilising AFC Energy's proprietary fuel cell system that will enable the supply of clean power back into the refining process.
AFC Energy will, subject to final agreement on all commercial terms, sell and lease components of its generation system for an undisclosed sum, reflecting the capital cost of the balance of plant and lease fees towards the cost of the fuel cell electrodes. The power generated, expected to be between 200kW and 400kW in capacity (dependent upon the final volume of hydrogen made available from the refinery), is expected to be at a lower cost than with that of existing regional grid tariffs in Queensland, Australia.
AFC Energy, following receipt of a non-refundable deposit within 5 business days of the offer, shall commence a brief engineering study to confirm the system sizing and logistics for integration of the hydrogen power generation unit fuel cell system into the refinery. This exercise will allow finalisation of the AFC Energy system design capacity and its final system costings, following which a binding sales and lease agreement is expected to be entered into.
The AFC Energy fuel cell system is expected to be delivered to Northern Oil's Gladstone facility in the first half of 2019.
Tim Rose, Southern Oil's Chief Executive Officer, said: "Southern Oil has at its heart a desire to develop new and innovative ways of generating clean fuels for Australia's future. The placement of today's order with AFC Energy for one of its hydrogen power generation units is the next phase of our commitment to a green and clean future through the generation of clean power from our surplus hydrogen streams. The potential to drive our renewable refinery increasingly off grid and towards green power consumption is a key driver for today's order and we look forwards to working closely with AFC Energy in delivering a successful outcome for this project. In developing the Gladstone Advanced Biofuels Pilot Plant over the last three years, Southern Oil, has benchmarked cutting edge renewable technologies from around the world. In my mind, AFC Energy's Alkaline Fuel Cell has great potential."
Adam Bond, AFC Energy's Chief Executive Officer, said: "With a global estimated 100,000MWe of hydrogen vented to atmosphere from industry each year, I am particularly delighted to confirm AFC Energy's strategic collaboration with Southern Oil, a highly respected and entrepreneurial Australian clean fuels refiner with a strong track record of delivery. The order received for the Company's fuel cell system reflects the first stages of a growing pipeline of commercial fuel cell projects in country and validates the opportunities we believe to be emerging in the Australian hydrogen market. Today's order from Southern Oil is a strong validation of the progression AFC Energy has made over the past few years and provides a strong cornerstone in the Company's commercialisation activities that are well underway."